Grand Jury: Tax Oil

New Revenues Needed, Advisory Body Insists

Wednesday, July 3, 2013
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With the oil industry pumping nearly 3.4 million barrels out of the ground in Santa Barbara a year, the county Grand Jury concluded it makes no sense that Santa Barbara County isn’t getting a piece of the action. To that end, the Grand Jury ​— ​made up of citizen volunteers ​— ​urgently advised the Board of Supervisors to put an oil tax on the ballot as soon as possible to let the voters decide.

If the county used the same tax formula adopted in Oklahoma, the Grand Jury estimated Santa Barbara could generate $22 million a year from onshore oil production. If instead the county imposed a more modest one-dollar-a-barrel tax ​— ​as recommended by county CEO Chandra Wallar early last year ​— ​it could reap $3.4 million a year in additional revenues. The Grand Jury concluded the county’s need for additional revenue sources is immediate and profound. The budget just approved three weeks ago by the Board of Supervisors had to paper over a $5 million shortfall between expenses and revenues. But the big picture is much bleaker, the advisory body opined, when spiraling pension costs, deferred road maintenance, and the expense of staffing the proposed new North County jail ​— ​$17 million extra a year ​— ​are included.

“Losing 83.3 percent of the taxes once garnered from oil production was a significant decline in revenue for California counties,” the report stated.

The Grand Jury acknowledged that many of the environmental concerns surrounding oil production ​— ​spills, air pollution, and fracking ​— ​remain the subject of ongoing contention. On those matters, it took pains to take no position. But while such matters are debated, the Grand Jury noted that oil companies have expanded the amount of oil they’re pumping, the number of wells they’re pumping, and the number of acres they’ve brought into production. The only other tax the county collects from oil development, the Grand Jury observed, came from property taxes, roughly $12 million a year. As much as that is, it’s still 83 percent less than it would have been had Prop. 13 ​— ​designed to provide relief from rapidly escalating property taxes ​— ​not been passed by voters in 1978. “Losing 83.3 percent of the taxes once garnered from oil production was a significant decline in revenue for California counties,” the report stated.

In contrast to onshore oil, the Grand Jury found that the county had managed to snag some financial benefit from the offshore oil development taking place in the channel ​— ​$20 million paid to the Coastal Resources Enhancement Fund since 1988. Last spring, the supervisors considered placing an oil tax on the ballot, but the initiative failed. During board deliberations, vehement opposition was expressed by North County business advocates who contended the measure would cost jobs, drive up the price of gas, and unfairly target a specific industry. The Grand Jury expressed unalloyed skepticism that any oil tax the county might impose would ​— ​or could ​— ​have any impact on local jobs or gas prices. It noted that a new oil tax would not fall “on the general populace” as the sales tax does and would definitely increase much-needed revenues.

As politically and financially irresistible as it might seem for the county to soak the oil companies ​— ​now reveling in record profits ​— ​to actually do so is much more complicated. Under state law, it would require four of the five supervisors to place an oil tax on the ballot if the revenues were to feed the general fund. (Given the makeup of the board, it’s exceedingly unlikely that would happen.) The good news is that such an initiative would require only a simple voter majority to pass. By contrast, only three supervisors need approve an oil tax initiative that detailed precisely how the money would be spent. But such a measure would need a two-thirds voter majority for passage. The last time county voters agreed to such a proposition was in 2008 when they approved Measure A, a sales tax increase that would fund freeway widening and road repairs. Another option would be for a citizens committee ​— ​separate from the supervisors ​— ​to collect enough signatures to place a general-fund oil-tax initiative on the ballot. The number of signatures might be daunting ​— ​15 percent of the registered voters in the county ​— ​but for such a measure to pass, only 51 percent of the voters would have to vote yes.


Independent Discussion Guidelines

A great idea, but I doubt any of the north county supes would go for it. Maybe we can call a special session to get around the rules ... like they're doing in Texas to squash abortion rights.

EastBeach (anonymous profile)
July 3, 2013 at 10:02 a.m. (Suggest removal)

Raise gas prices???? The local oil is graded, for the most part, heavy sour, not used in the production of gasoline.

BeachFan (anonymous profile)
July 3, 2013 at 11:54 a.m. (Suggest removal)

oh...this is a great idea....
nothing like slapping the hand that feeds you...

thomas592003 (anonymous profile)
July 4, 2013 at 9:35 a.m. (Suggest removal)

We need city & county pension reform (deep cuts) before raising taxes again. Drop public salaries to that matching private sector median in each field and cap pension payouts at 50% of high water mark for starters. That would remain a better deal than working in the private sector where you have to produce something to get paid and where there's no defined pension benefits. While we're at it, this business of public worker unions financially backing public office candidates most egger to push through increases in pay / benefits / unproductive work rules has got to stop because it breeds corruption.

Yo EastBeach, let's talk abortion. How's about we keep murdering the unborn legal if people's taxes are never used to pay for it? You pay for your own murderous abortions out of pocket and rest of us who choose to live responsibly, ignore it (keep our mouths shut). Wouldn't that be more than fair?

SBLifer (anonymous profile)
July 4, 2013 at 10:07 p.m. (Suggest removal)

Can't complain you don't have the best public employees if you're not willing to pay the best.

Ken_Volok (anonymous profile)
July 4, 2013 at 10:20 p.m. (Suggest removal)

thomas592003, it's too bad that that hand isn't feeding us.

byronsnake (anonymous profile)
July 5, 2013 at 7:52 a.m. (Suggest removal)

Can't complain that we don't have the best Big Mac's if we don't pay the best either.

Botany (anonymous profile)
July 5, 2013 at 8:29 a.m. (Suggest removal)

Which is why you pay a little more and go someplace safe and nutritious, if the Botanies of the world haven't bled you dry.

Ken_Volok (anonymous profile)
July 5, 2013 at 9:54 a.m. (Suggest removal)

Maybe paying more is an option for a 1%'er like you Ken. The rest of us need to get the best value for our money. Obviously, you don't think the taxpayers need to get value for their money either. They just need to pay more in taxes.

Botany (anonymous profile)
July 5, 2013 at 10:11 a.m. (Suggest removal)

Here's an example of the quality improvement you get when you pay government workers more in salary and benefits.

Botany (anonymous profile)
July 5, 2013 at 10:23 a.m. (Suggest removal)

(A) We don't live in Chicago, or even Illinois and are in fact several states away.
(B) There is little nutritional value in McDonald's so you actually get less for your money. C'mon Bot, you're our expert on values- get it right.
(C) Which taxpayers? The ones getting big O'Bush breaks?

Ken_Volok (anonymous profile)
July 5, 2013 at 11:22 a.m. (Suggest removal)

" While we're at it, this business of public worker unions financially backing public office candidates most egger to push through increases in pay / benefits / unproductive work rules has got to stop because it breeds corruption."
-- SBLifer

Sure, and to be fair, let's stop corporate giving as well. And dark money, too. You up for that, Lifer?

SezMe (anonymous profile)
July 5, 2013 at 4:41 p.m. (Suggest removal)

If we didn't give billionaires tax breaks we wouldn't necessarily be having this discussion.

Ken_Volok (anonymous profile)
July 5, 2013 at 4:45 p.m. (Suggest removal)

we do need "city & county pension reform" but not deep cuts. Yes, tax the oil, but there is an issue with Lifer's charge about public unions backing public office candidates who overpromise increases for workers in the union (worse: bigger pensions to their leaders). But with Citizens United and such obscene corporate control of election funding...uh, two big problems here.

DrDan (anonymous profile)
July 5, 2013 at 5:21 p.m. (Suggest removal)

There's a lot of small indie companies around here, many of whom are good, responsible community members; it's not all Exxon etc so we should be careful in the details. I think companies based in the County should get a break.

Ken_Volok (anonymous profile)
July 5, 2013 at 5:53 p.m. (Suggest removal)

Employee unions fund most of the local elections in this county. Just look at the books at the Elections office. They get their chums on the boards, and the chums bargain for the employee union paychecks in order to get re-elected. Local politics 101.

And we keep voting for that self-serving scheme and wonder why everything is going wrong as a result.

Vote independence from employee unions next time, until you get a new majority that is not as union incestuous. Hold them accountable to oversee the county for the residents; not just the employees under their charge.

You can apply this lesson to every single board, or council or school district you choose. Try independence from union control next time and see how quickly things will finally turn around.

foofighter (anonymous profile)
July 6, 2013 at 10:14 a.m. (Suggest removal)

For some reason SBLifer was able to make this a public pension discussion (and a little about his wacko religious views on abortion), BUT he and others haven't been reading the news in regards to public employee benefits.

We already have new pension reform laws in effect for NEW employees and other reforms to hit the pocket book of current employees in the future. That's all you're going to get no matter who's in office.

San Jose, San Diego and Monterey counties are perfect examples of what it looks like when supervisors and city councils go on a Teahad. The California Supreme court reminds them what our state constitution says. ALL of their ballot initiatives have been suspended or tossed out. It doesn't matter what the teabaggers convince the public of. If they pass a law that violates the contract clause it's going to be tossed.

When are you Teatards going to get it through your little minds? You're wasting taxpayer money passing these laws and then defending them when undoubtedly the courts will overturn them. Pure stupidity.

Validated (anonymous profile)
July 7, 2013 at 1:18 a.m. (Suggest removal)

What's stupid is the collusion between politicians and public employee unions. The reason pension benefits have gotten so out of control is that the bill comes due on someone else's watch. By the time the bill comes due for the votes the politicians bought with taxpayer's money, the politician is gone from office. It's the perfect Ponzi scheme at taxpayer's expense.

Botany (anonymous profile)
July 7, 2013 at 6:49 a.m. (Suggest removal)

The City of Stockton bankruptcy rulings regarding public pensions and public sector contracts will be legally interesting. The other shoe has yet to drop. What does happen when an entity finally runs out of spending other people's money?

There is no sympathy at the federal level to bail out California's public sector excesses. They will not crank up the federal money machine on our behalf.

Where will the money come from public sector employees when the till is tapped like happened in Stockton, and a few more other jurisdictions also soon to fall. I suggest everyone maintain a very sound Plan B at the same time for their own future.

"Backed by the full faith and credit of the United States of America" does not apply to contracts entered into by the State of California with its employees. Yes, this state has been running a Ponzi pension scheme for public sector employees for far too long. You have been given notice.

No surprises and you can't eat wishful thinking once the game is over. The state Ponzi pension promises are the equivalent of capital appreciation bonds. Don't count on them for your sole retirement nest egg. Just sayin'.

foofighter (anonymous profile)
July 7, 2013 at 9:43 a.m. (Suggest removal)

Why don't the NeoCons move to a country they like instead of trying to destroy this one. And take the Tea Trash with ya.

Ken_Volok (anonymous profile)
July 7, 2013 at 10:36 a.m. (Suggest removal)

I see the Tea Trash is still believing the dooms day fantasies of their leaders. These are the same clowns building under ground bunkers. Medication can help with your fears.

Validated (anonymous profile)
July 7, 2013 at 2:17 p.m. (Suggest removal)

Comedy. Article about taxing those with the most $ (oil of course for those who didn't bother to read the article). Machines write in about how we need to go after the middle income unions, because why? they have all the money? wrong, makes no sense like that abortion turd side track. Diversion tactic. Big huge pile.

spacey (anonymous profile)
July 8, 2013 at 12:48 a.m. (Suggest removal)

Public sector salaries and benefits run close to $100,000 plus a year - this is now "middle income"?

Guaranteed public pensions for life earning the equivalent of at least 5% on a million dollars is "middle income"?

Demanding taxpayers take their money to cover public pension short-falls for public pension union members no longer working is "middle income"?

Think again.

foofighter (anonymous profile)
July 8, 2013 at 9:47 a.m. (Suggest removal)


Ken_Volok (anonymous profile)
July 8, 2013 at 11:34 a.m. (Suggest removal)

The G.O. Piggies would rather tax students than billionaires. I think a quick study should be run to find out exactly who are the oil companies in the county? Are they primarily the majors or locally based indies? We need to be wise not to force our local companies to sell to Exxon etc. Local people most often take more care etc.
In addition we need to be using resources to transfer off of fossil fuels altogether. Another danger in this tax is it will give less incentive for the County to take leadership in the crossover.

Ken_Volok (anonymous profile)
July 8, 2013 at 3:36 p.m. (Suggest removal)

Foofighter is a great used car salesman. The 1.5 to 2% retired public workers that collect over $100k retirements make little or no impact on the system, but he won't tell you that.

Typical Teanderthal liar.

Validated (anonymous profile)
July 8, 2013 at 4:03 p.m. (Suggest removal)

It's the kind of drivel you'd expect from the local head of the GOP, which is becoming Gandrud On Parade.

Ken_Volok (anonymous profile)
July 8, 2013 at 4:16 p.m. (Suggest removal)

I wonder if Santa Barbara County realizes that when you add a severance tax you decrease the property taxes of the top two taxpayers in the county, as well as a number of other high prop tax payers. That money is then taken away from schools, fire, and police and placed into a separate account. If the county does not reduce spending, unless the county can guarantee it goes back to schools, this money will go to pensions and not get back to the place it was originally intended, actually creating a tax shortage for local schools.

To byronsake why don’t you check out it shows the top two tax payers are oil companies, so yes they are the hand that feeds you.

I also wonder how the environmentalist will feel about their county relying on "nasty oil" taxes for their county to survive. Once they rely so heavily on those taxes it will be impossible for the environmentalist to get the production companies out of SB County.

Here’s an idea tax each restaurant food bill 1 extra dollar for non-locals and .50$ for locals, I bet there are far more tabs at restaurants than barrels of oil produced each day! Besides why should local people profit off the natural Santa Barbara climate that brings so many tourists in? If you can afford to live in Santa Barbara you must be able to afford an extra .50$ right?

Interesting reaction to a related article by Mr. Welch

BAD886 (anonymous profile)
July 8, 2013 at 4:38 p.m. (Suggest removal)

Locals are already overcharged.

Ken_Volok (anonymous profile)
July 8, 2013 at 4:45 p.m. (Suggest removal)

i know, i was'nt all that serious about the tax, but it is a slippery slope when you tax business, any specific business, because of your own shortfalls

BAD886 (anonymous profile)
July 8, 2013 at 4:47 p.m. (Suggest removal)

In addition, a lot of taxes, fees etc are judged by what wealthy large companies can pay, not what small indie ones can or could possibly be expected to. In effect monopolies are sometimes created.

Ken_Volok (anonymous profile)
July 8, 2013 at 4:54 p.m. (Suggest removal)

Ken, the companies won't pay the tax, they'll just pass it on to consumers.

Botany (anonymous profile)
July 8, 2013 at 5:05 p.m. (Suggest removal)

Another blogger made that argument as well, then someone else claimed the oil here isn't good for gasoline so we wouldn't be impacted..?
I don't claim to be an expert on oil types for the record!

Ken_Volok (anonymous profile)
July 8, 2013 at 5:16 p.m. (Suggest removal)

Average teacher pension is $53,000 - so no one is just talking about the 2% making over $100,000 a year public pensions. (Facts: Pew Charitable Trusts website poll)

I am talking about the average teacher pension in this state - $53,000 a year for life for working a 9 month year. Stop arguing issues not in contention or putting words into other people's mouths - bad sportsmanship and proves the paucity of your argument.

$53,000 pension for life for the average California teacher is the investment equivalent of one million dollars in the bank earning 5% interest ...for life. For the life of me I don't even know who can guarantee a 5% fixed rate of return these days, but retired teachers don't have to worry. Just the rest of us do.

foofighter (anonymous profile)
July 8, 2013 at 8:29 p.m. (Suggest removal)

Someone appears to have done poorly in school.

Ken_Volok (anonymous profile)
July 8, 2013 at 8:31 p.m. (Suggest removal)

Top grade oil is light sweet crude (Middle east) - lowest is heavy sulfur asphalt. Ours can run more towards asphalt.

foofighter (anonymous profile)
July 8, 2013 at 10:40 p.m. (Suggest removal)

Thank you for the info Mr. Foo.

Ken_Volok (anonymous profile)
July 9, 2013 at 12:01 a.m. (Suggest removal)

foo is showing his cards. again.

spacey (anonymous profile)
July 9, 2013 at 12:02 a.m. (Suggest removal)

That info was wrong foo. The average teacher retires at 62 with less than $40k a year, and they do not collect social security. 70% are women. Why must you continue this war on women?

What kind of selfish moron would begrudge such a meager pension for a college educated public servant?

Validated (anonymous profile)
July 9, 2013 at 3:07 a.m. (Suggest removal)

Pew Charitable Trusts independent survey found the average CalSTRS pension to be $53,000.

Average social security pension is far less than half that amount. Why would that change anything. Are teachers complaining they do not get SS on top of their CalSTRS pension now too?

What does gender have to do with this - straw dog again woofing at the moon.

College educated (Bachelors plus teaching credential) public servants make $90,000 a year in salary and benefits according to SBUSD for a nine month teaching year, and according to Pew, obtain the average of $53,000 a year for life after they stop teaching.

It is the teachers choice to stop working at age 62 or go to the full SS age of retirement at age 66 (increasing now every year to get full SS benefits).

Point is, teachers do not get meager pay nor meager pensions, and they should stop lying about this.

foofighter (anonymous profile)
July 9, 2013 at 9:23 a.m. (Suggest removal)

Maximum (not average) SS benefits at various retirement ages:

foofighter (anonymous profile)
July 9, 2013 at 9:59 a.m. (Suggest removal)

I was referring to the oil info.

Ken_Volok (anonymous profile)
July 9, 2013 at 11:01 a.m. (Suggest removal)

They should get even higher pensions

Ken_Volok (anonymous profile)
July 9, 2013 at 11:07 a.m. (Suggest removal)

Pews numbers are wrong pal, and if you think teachers only work during school hours you're very uneducated. I've seen the long nights put in while "off the clock" with no extra pay. Something I'm sure you'd never do, and you can thank unions for that.

Lets be honest here. Trying to say teachers should have pensions no greater than social security is a BS argument. Foo's real bone of contention is the continued popularity teachers unions hold with the voting public. Just look at props 30 and 32. It's what fires up those "patriot" Teabillies.

That one tooth wolf is wearing tea bags from its stupid looking hat, and his failing argument is leading to starvation. The plump sheep are drinking wine on the hilltop behind him and he hasn't a clue.

Validated (anonymous profile)
July 9, 2013 at 2:45 p.m. (Suggest removal)

Why is it wrong that people be compensated? They want to make teaching jobs so low paying that nobody can afford to be a teacher in the public schools, de facto privatization.

Ken_Volok (anonymous profile)
July 9, 2013 at 3:01 p.m. (Suggest removal)

California is the ONLY state in the nation where there are no extraction fees for these oil giants who are plundering our shale rock formations now, wasting our precious water in a major agricultural state, and contributing to seismic activity that could cause a major earthquake. It is about time that these giant AND profitable energy corporations start paying their fair share like the REST OF US. FRACK 'EM.

vlhamilton (anonymous profile)
July 11, 2013 at 10:32 a.m. (Suggest removal)

You are kidding right Vlhamilton? there are so many things wrong with you statement i dont where to begin.

California is one of the only states to tax oil in ground, classifing reserves as real property. so companies are taxed on what they havent even made money on yet. California oil companies are right on par with the rest of the country on how much they are taxed.

Wasting water? i would love for you to give me the figures on that, i know plenty of farmers that use a 100 times more water than any oil company and that is in 1 day. 1.2 trillion gallons of water is used by farmers each year. as opposed to 1 million per well @ 364 total wells last year. less than .001 percent

where is your back up data of it contributing to seismic activity? even if this were the case, do you understand why major earthquakes happen? its when two plates build up so much friction that when they finally do slip it causes an earthquake. would small activity help release some of this tension? cause more smaller earthquakes? that would be a good thing, no?

What about the giant profits of oil companies, yes they are making record profits, i wont argues with that, but they are also investing record amounts of capital. if you wanted to make a billion dollars, no problem, just give me 10 billion first. Most oil companies average around 11% returns on investment. why don't you look at pharmas, computer software, or alcohol production and sales. all above 20%

BAD886 (anonymous profile)
July 11, 2013 at 12:14 p.m. (Suggest removal)

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